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Topics & Tips
Franchising
Consider Franchising as an Income Opportunity - But Watch Out!
Having your own business income opportunity is the American dream and,
increasingly, international interest in owning a
business has been building as well. There are many
questions that must be answered before you consider
owning a franchise or starting any business at all.
The first question to ask yourself is: "Do I really have
the right mindset that is required to work for myself"?
The reason this question is first is because without the
attitude, drive, and ability to focus on long term
goals, you will not be happy owning your own business
whether it be a franchise or anything else.
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This is not a "get rid of the boss" and live happily
ever after situation. It will require many hours of hard
work, much dedication, always tough decisions and, most
likely, many times where you must put the business first
over your own needs.
If you do not have the stomach or the drive to do this,
then continue getting a regular paycheck and forget a
business of your own. You will find your customers to be
much more demanding than any boss could ever be! Along
with this introspection, is the question:
"How have I worked on my own in previous situations?"
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Is this a new or untried product or service, do I enjoy
the experience of working for myself, can I survive
pressure and can I actually keep myself going when tough
decisions have to be made? These are all questions that
must be answered before attempting any franchise
business.
The second question to ask yourself is: "Have I
researched the market or field regarding the area I plan
to purchase a franchise"? This must be very extensive as
you want to have a good mix of the business fit being
right or correct for you and a market that will support
your decision. In other words, you want to be able to
enjoy your business and it must have a market that
desires to purchase from your business as well. You will
need to research the type of personality you have, what
your likes and needs are, and if your fellow consumer
feels the same way about a product or service franchise
you may purchase. You want to give yourself the absolute
best scenario to succeed in something that you will
truly enjoy working and marketing or else just stay in
the job you have at present and keep your security.
After you have researched your desires and needs and
attitudes, the next step is to address your financing
issues. What amount can you comfortably afford to put
down on a franchise? What will the operating expenses
be? Within this thought process there are many pitfalls.
For instance, do not forget to allow for employee
salary, benefits, replacement training, recruiting ads,
possible temporary help, government regulations for
employment, accounting fees, local licensing fees,
permits, remodeling or leasing costs, and many more
costs that will need to be addressed within a start-up
package plan. Many times a franchise licensor will be
able to help with several of these questions. However,
please do allow their word to be considered as final. Go
out and do research yourself and find out if the figures
they present seem logical.
You will want to check the Internet for lists and types
of franchise licensors that are willing to take on new
franchisees. Check the business publications such as
Inc. magazine, Franchise Today or Entrepreneur to see
what franchises are up and coming or those that are
solid and gaining ground. You want a franchise that is
growing and not stagnant and also one that has no
litigation in courts or other legal issues.
Once you have narrowed down the field you want to be in,
what you will bring to the table in regards to your
personality and goals, the type of financing that you
have available, and have done some research on the
market for your product or service, it is time to talk
to the franchisor that grants the license.
The first thing to remember with a franchisor is that
they are there to sell you a franchise. Even the best
franchisor out there will attempt to market their
product and downplay other franchises. What you want to
realize here is that their goal and game is to have
successful franchisees but that does not prevent them
from possibly making a wrong fit with you. You are your
best advocate. Keep your head and do not let their
enthusiasm become overwhelming to you with thoughts of
riches and independence. The nature of a franchise is to
share a good branded name and to spread the advertising
and marketing costs over all the franchisees. Therefore,
you will have rules, regulations, and contributions that
you will be required to make and you will have a
headquarters to oversee your operation.
This may be good for some people and for others, it may
just not sit right. This is where your personality
evaluation comes in. Judge for yourself if what the
franchisor is providing matches up in your mind with the
control they operate over your business.
The best thing you can do for yourself after you have
selected a franchisor, is to have a business attorney of
your choice go over all the papers, suggest items that
might need some changing to benefit you more, and
general advice on whether this licensing agreement is
standard in the industry. You want to avoid being locked
into a franchise that offers their licensees little
resources should a problem occur. You may also want to
contact several other franchisees and ask how satisfied
they are with the service they receive.
The conclusion is that franchising can be a wonderful
method of jumping into being into business for yourself
but not by yourself. The licensor can offer many
resources it might be hard to afford by yourself. They
are a good source of encouragement and hand-holding when
you are starting out and things seem overwhelming. Other
franchisees will probably be helpful as well if you are
not in their immediate area. Being in business for
yourself can be exhilarating and franchising can be your
ticket if researched thoroughly and properly.
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